Steve Dempsey

By eweek  |  Posted 2001-06-25

Chairman and CEO, PetQuarters

Age: 45

Degree: Bachelor of Arts degree in business from Hendrix College

Stress reliever: "With three children of my own and two stepkids, I entertain — and get entertained — by children when Im not at work."

Pets: An Australian Shepherd named Cassie and a parrot named Alex

While other online pet suppliers have literally gone to the dogs, PetQuarters — headed by Chairman and CEO Steve Dempsey, once a stockbroker at PaineWebber — is going strong in the e-tailing space. The company does wholesaling and retailing through its catalog and online operations. For the three months ended March 31, it had a loss of $5.4 million — due largely to several one-time, noncash write-offs from acquisitions. Revenue was $3.3 million. The company does not break out its catalog and Web revenue, although it says the Internet portion is growing. And it just raised $1.9 million in funding, primarily through an unnamed angel investor. Dempsey recently spoke with Editor John McCormick.

A lot of your competitors didnt make it. Whats your key to staying in business?

Recognizing from the beginning — in the early stages of the Internet — that most consumers bought their pet supplies at the grocery store and the pet store and that being a pure e-tailer was simply not workable. We stepped back and said: "If were going to make this happen, we have to find a cheaper customer-acquisition method." To us, the synergies of the Internet and pet supply catalogs — a ready customer base used to purchasing direct — were so clear. We then acquired a catalog company [Humboldt Industries in 1999]. We were roundly criticized for doing it. E-tailing had all the buzz. We took our lumps and knocks along the way. But, today, I think weve been vindicated.

But now you need to turn your catalog customers into online customers. How are you going to do it?

We offer discounts and specials on the Web site that are not available in the catalog. We also offer free shipping if a customer goes to the Web site to make a purchase. Thats been a very important customer-acquisition tool. With that said, free shipping is something that we cannot offer on an open-ended basis. But well find other ways to entice customers to the site. And once we get them there, theyre exposed to a tremendous depth of content and community thats not available in the printed catalog.

And you think you can make it? You believe in the future of e-tailing?

Yes. This is not a fad. People will, over time, become more and more accustomed to making purchases online. My kids will be forever comfortable doing it — while my mother would never do it. I would say that it will never replace traditional retailing. But it will provide an alternative for certain consumers who find it convenient and worthwhile.

Whats the best part of your job?

Before any significant dollars were put into this space, we sat here underfunded, overworked, overchallenged. And then, along comes the competition with their tremendous sums of money. We look back now and the competitors have come and gone. We may be bruised, but we survived. To the small group of people who stuck it out from day one, theres a certain amount of gratification that comes with that. We have an absolute commitment to making sure this company survives and prospers.

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